06 October 2016

A Natural Experiment In Economic Development Favors Collective Ownership Of Farmland

There should be more such books! New Zealand and Uruguay had roughly comparable per capita incomes in 1920, yet New Zealand pulled away and never gave back much of that lead. One factor, according to the author, was that the Kiwis had about 40% public ownership of farm land in 1930, resulting in a greater distribution of gains from agriculture and eventually a more egalitarian polity. Uruguay, in contrast, had engaged in some badly-run land privatizations and ended up with excess concentration. New Zealand also took the lead on frozen meat shipments, and New Zealand had a much more rapid recovery from the Great Depression, among other factors, and in Uruguay the enforceability of contract rights slipped away considerably in the 1940s and 1950s. In sum, Uruguay ended up with more rent-seeking policies that redistributed resources toward elites. I can’t believe this one wasn’t a bestseller.

Particularly notable is that this economist, a group often skeptical of public ownership, points to collective ownership of farmland as a critical positive factor in the economic development of New Zealand, while privatized land ownership helped ruin Uruguay's economy, contrary to what just about any contemporary economist would recommend today.